KGHM to shutter Sudbury-area mine

Blaming a long slump in metals prices, mining company KGHM on Wednesday announced it was shuttering its Levack Mine’s Morrison Deposit, throwing more than 100 people out of work.

“This is not an easy situation for the employees and families impacted,” general manager Steve Dunlop said in a release. “We are a small company and we all know each other quite well. This announcement hasn’t been a surprise for many of our people as this is a cyclical industry and we have been openly working with them on solutions to our financial challenges at Morrison — but that certainly doesn’t make this any easier.

“We were really hoping the mining sector would have recovered by now.”

KGHM, a Polish-owned company, said the commodities market has been struggling and slow to recover, which is putting immense financial pressures on resource-based companies around the world and locally — as witnessed by cutbacks with other local operators in the past year.

“This is considered to be one of the longest mining down cycles in recent history, pushing almost 10 years in Sudbury,” the company said.

To deal with this, KGHM Sudbury said it has begun the process of moving its Levack Mine’s Morrison Deposit into care and maintenance mode, with completion in the spring.

Care and maintenance means the company won’t be mining ore at the mine, but will keep it open with reduced employees until markets improve making mining ore at Morrison profitable again.

It is still working through the project plan of putting Morrison into care and maintenance and determining final impact on the workforce; however, initial estimates show a reduction of about 120 employees.

KGHM also said it will be increasing its operations at McCreedy West Mine where a number of the Morrison employees will be transferred. McCreedy West has been a profitable operation and KGHM said it is looking to focus on McCreedy West and maximize its potential.

When markets improve, KGHM said it has plans to bring Levack production back on line.

KGHM has a number of Sudbury operations, including McCreedy West Mine and the Victoria Mine project.

KGHM had already cut 22 jobs from its Morrison operation, also due to low metals prices.

Nickel prices have been up and down over the past year, touching US$7 a pound about six months ago, before dropping to below $5 a pound at times in recent months. On Wednesday, it was selling for about $5.2 a pound.

Analysts, however, are predicting stronger nickel, copper and other metal prices due to increased demand for electric vehicles. Those metals are important components in the batteries that power electric vehicles.

sud.editorial@sunmedia.ca

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The mine’s history

The Morrison mine is located on the western border of the richly mineralized North Range of the Sudbury igneous complex. Extraction is through two production shafts: Levack and Craig.

– The Levack mine, which mainly produced nickel, commenced its operations in 1915. The mine was closed in 1997.

– KGHM acquired it in March 2002 and renewed production five years later.

– In addition, exploration was carried out on the acquired property that resulted in the discovery of the Morrison deposit, rich in polymetallic ore with high-grade copper, nickel and precious metals and the subsequent commencement of production.